Although the U.S. Supreme Court has made clear that a district court must conduct a "rigorous analysis" to confirm that the requirements of Rule 23 are met1 and that a plaintiff seeking class certification must "affirmatively demonstrate" compliance with the Rule,2 the Ninth Circuit has lowered the bar for the type of evidence that a plaintiff may rely upon to support a class certification motion. On May 3, 2018, in Sali v. Corona Regional Medical Center, the Ninth Circuit reversed a district court's denial of class certification in a putative employment class action, including because the district court abused its discretion in declining to consider evidence on the grounds of inadmissibility.
The Allegations and District Court Decision
Marilyn Sali and Deborah Spriggs (collectively, "Plaintiffs") are registered nurses ("RNs") formerly employed by Corona Regional Medical Center ("Corona"), an acute care hospital.3 They filed a putative class action complaint alleging that Corona and UHS-Delaware, a healthcare management company that manages and provides administrative support to Corona (together with Corona, "Defendants"), violated California state wage and hour laws.4 They purported to bring these claims on behalf of a general class and seven subclasses tracking their specific allegations.5
Defendants opposed class certification on multiple grounds, including because (i) Plaintiffs' proposed subclasses failed Rule 23(b)'s requirement that questions of law and fact predominate over individualized questions and (ii) Plaintiffs did not satisfy Rule 23(a)'s typicality and adequacy requirements.6
Judge Philip S. Gutierrez of the Central District of California denied Plaintiffs' motion for class certification, agreeing with Defendants in nearly all respects. Perhaps most significantly, he held that the Plaintiffs had not carried their burden under Rule 23(a) of demonstrating that the injuries allegedly inflicted by Defendants on Plaintiffs are similar to the injuries of the putative class members because Plaintiffs did not offer any admissible evidence of Plaintiffs' injuries in their motion for class certification.7 Specifically, he emphasized that Plaintiffs themselves had not submitted any sworn declarations with their motion. Instead, they relied entirely upon an inadmissible declaration from a paralegal for Plaintiffs' counsel concluding that, based upon the paralegal's analysis of timekeeper and payment reports (which were not attached to the declaration), Plaintiffs were harmed as a result of Defendants' employment practices.8
The Ninth Circuit's Reversal
The Ninth Circuit reversed the district court decision in all material respects.9 Most significantly in terms of precedential impact, it held that the district court abused its discretion in declining to consider evidence of typicality solely on the basis that it would be inadmissible at trial.10
In support of this holding, the Ninth Circuit noted that a class certification order is "tentative," "preliminary," and "limited" and that "the evidence needed to prove a class's case often lies in a defendant's possession and may be obtained only through discovery [and] [l]imiting class-certification stage proof to admissible evidence risks terminating actions before a putative class may gather crucial admissible evidence."11 It elaborated that whether class evidence is admissible should go to the weight of the evidence, but must not be dispositive, and that the district court should instead evaluate the "persuasiveness of the evidence presented" at the Rule 23 stage.12
This holding is a bitter pill to swallow for the defense bar. While class certification orders are theoretically tentative, preliminary, and limited, the practical reality is that they are often outcome-determinative. When a class is certified, many if not most defendants settle given the enormity of potential of exposure to a class, irrespective of the merits of a case. Indeed, trials in class actions are extremely rare. Moreover, the rationale that it would be unfair to require plaintiff to proffer admissible evidence before the close of discovery ignores the reality that, in most class actions, extensive discovery (especially bearing on Rule 23's requirements) occurs before the class certification motion. Indeed, lack of discovery from defendants surely did not preclude the named Plaintiffs in the Sali case from submitting declarations of their purported harm with their class certification motion.
Furthermore, as noted in the opening paragraph above, the Ninth Circuit's holding contravenes the spirit of the U.S. Supreme Court's holdings that a district court must conduct a "rigorous analysis" to confirm the requirements of Rule 23 are met13 and that a plaintiff must affirmatively demonstrate compliance with Rule 23's requirements; i.e., that there are in fact sufficiently numerous parties, common questions of law or fact, and adequate representative parties.14 Moreover, in Wal-Mart Stores, Inc. v. Dukes, the Supreme Court observed that it "doubt[ed]" the district court's conclusion "that Daubert did not apply to expert testimony at the certification stage[,]"15 which suggests that the Federal Rules of Evidence do apply at the class certification stage.
A Deepening Circuit Split and Potential U.S. Supreme Court Review
Joining the Eighth Circuit,16 the Ninth Circuit's decision deepens a circuit split regarding the admissibility of evidence at the class-certification stage. On the other side of the split, which includes the Fifth Circuit and the Seventh Circuit, courts have required evidence submitted in support of a class certification motion to be admissible.17 Similarly, the Third Circuit requires that expert evidence submitted in support of a class certification motion to satisfy Rule 702 the federal standard expert witnesses must meet when introducing experts at the classcertification stage.18
This circuit split may ultimately prompt the U.S. Supreme Court to grant certiorari and resolve the issue. In 2013's Comcast Corp. v. Behrend, 569 U.S. 27 (2013), the Supreme Court granted certiorari on the question of whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis, but ultimately decided the appeal on other grounds.19 Sali may provide the Court with another opportunity to decide the issue.
We will continue to monitor the case, including any appeals, and will update you on any developments.